|| That the House recall its resolution adopted March 8, 2017, which asked the government to keep its promise to cap the stock option deduction loophole and to take aggressive action to combat tax havens, and that the House call on the government to respect that vote by ensuring that both measures are included in Budget 2018.
He said: Mr. Speaker, as you know, we on this side of the House will never back down and never stop working hard to create a fair tax system. We think this is far too important to the Canadians who may be listening to us today. We need to put an end to the existing system.
We are giving the Liberals a second chance. On March 8, 2017, we presented a motion in the House of Commons, presented by my colleague from and seconded by the member for , to work to crack down on the incredibly abusive use of the stock option deduction loophole and to take aggressive action against tax havens. The NDP motion passed overwhelmingly.
Since then, we have actually seen the government backtrack. We are giving the Liberals a second chance today, and over the next few days, if they vote for our motion next Tuesday. What we are saying, and what over 90% of Canadians are calling for, is that in budget 2018, which is coming down in the next few weeks, the government crackdown on the use of the stock option deduction loophole and take aggressive action against tax havens. That is what we believe needs to happen.
Why is that? We believe very strongly that we are seeing unprecedented inequality in this country. We see it every day. Certainly the statistics are very clear about this as well. We have learned, just in the last few months, that two wealthy Canadians, David Thomson and Galen Weston Sr., now have the same level of wealth as 30% of all Canadians. Thirty per cent of all Canadians put together have the same wealth as two Canadian men.
A great deal of why we are seeing that massive increase in inequality is due to the fact that we have an income tax system that is stacked against regular Canadians. Just last month, we saw figures showing that the average income of Canada's wealthiest CEOs is 200 times that of the average Canadian worker. There is no doubt that we are seeing a massive increase in inequality under this government. We are seeing more and more wealth concentrated in fewer and fewer hands.
Regular Canadians are seeing record family debt loads. The figures from Statistics Canada do not lie. Consumer credit, excluding mortgages, has now reached the level of $0.6 trillion. That is $600 billion that Canadian families owe. The average Canadian family now has a record debt load, even worse than under the former Harper government, and we are seeing this debt load increase. We are now number one among the industrialized countries. That is a crushing level of family debt.
What measures has the government put in place to address the income tax inequality, the stock option deduction loophole, and tax havens? Since we adopted the motion on March 8, we have not seen much action at all.
When we talk about the stock option deduction loophole, we are not talking about something that is spread out among Canadians generally. I am going to refer to the Toronto Star of January 6, 2018. The editorial, talking about the issue of tax fairness, says that the widening wage gap we are seeing in this country, with CEOs earning 200 times the income of the average Canadian worker, requires that we move forward promptly with tax fairness. It has identified the stock option loophole as well.
I will quote from the article:
|| Currently, compensation received in the form of stock options is taxed at a much lower rate than regular income. The tax break was conceived, in part, to help capital-starved startups attract top talent, but has been co-opted by executives at established companies as a way to reduce their tax load. Until recently, Ottawa lost about $1 billion every year through the loophole, more than 90 per cent of which went to the top 1 per cent of earners.
They cite that in 2013, for example, 75 of Canada's 100 top-paid CEOs received part of their income as stock options. This allowed them to accrue combined savings of $495 million, or $6.6 million each. That is half a billion dollars of foregone revenue to subsidize 75 very rich people, half a billion dollars of government funding that provides support for 75 of Canada's richest people. We can do better. We can take those funds and make sure that those very wealthy people pay their fair share of income tax and ensure that we are taking care of regular Canadians. That is what we propose.
When we talk about the stock option being concentrated, half a billion dollars going to subsidize 75 very rich people, we can see the harm in taking that out of the income tax system to give to the very wealthy. It has a profound impact on Canadians.
However, that is not all, and CCPA has outlined this in very effective terms. When we see what has happened with the corporate income taxes, we also see that corporate income taxes are decreasing as a percentage of what is paid compared with regular Canadians but also in terms of the overall effective corporate income tax rate. The CCPA outlined in its study last year that the effective corporate income tax rate in 2017 under the current government is now much lower, 9.8% after preferential tax considerations are included. That is 9.8% in terms of what the effective corporate income tax rate is for the corporate sector.
I can assure members that people who are plumbers, construction workers, child care workers, or nurses are not paying a 9.8% effective income tax rate. Canadians like my family who pay their fair share of taxes, work hard and they want to contribute their taxes because they believe that contributes to the common good. However, that common good is being undermined by the increasing inequality that we are seeing and an income tax system that is profoundly unjust. It is not an income tax system that is fair in any way, shape, or form. It is an income tax system that increasingly takes away from those who really need the supports of that common good, those common investments that Canadians make, and instead provides those investments, as we have seen, to the tune of half a billion dollars for 75 of Canada's wealthiest CEOs.
When we passed this motion last year, we expected the government to take action. It has not. However, the Liberals now have the opportunity with our motion today to take action in the budget in 2018 and crack down on the abusive use of the stock option deduction.
We also talked in our motion last year about tax havens, which are an increasing problem in terms of money going offshore, money that should be paid as income tax in Canada. Part of the reason we are seeing such a low effective corporate income tax rate is due to the use of tax havens, money being transferred offshore to the tune of hundreds of billions of dollars.
The tax havens are a growing problem, and I will explain why in just a moment, but what we are seeing through the use of the tax havens is, at a minimum, $10 billion a year that could be used for so many other things, including affordable housing, providing medication to Canadians, or ensuring that child care is supported when we are seeing extraordinarily high costs for child care for the average Canadian family. All of those things would be taken care of if we actually ensured that the income tax system was fair. However, $10 billion a year at a minimum, and estimates run far higher, is now escaping from the Canada Revenue Agency, which means that the common good, those investments that we make together, is simply being lost.
In addition, we are seeing the use of a new tax haven format, and that is the digital tax haven. Our parliamentary leader and revenue critic have been raising this issue, as have I, repeatedly in the House of Commons. In the digital field, we are now seeing big digital players like Facebook, Netflix, and Google making billions of dollars in Canada and not paying a cent of tax. It is a new format for the Liberals, a digital tax haven, which allows for tax-free profits and tax-free money. They are not even paying the GST, which is a double problem.
Not only do we have these new digital tax havens created by the Liberals, which they allow to continue, but it also means they are undermining legitimate Canadian businesses. In my community, local newspapers are struggling because they have to pay the assortment of taxes, which are part of the common good to contribute to the country, but their competitors do not. The digital tax havens have a profound negative impact on local community resources and cultural industries, yet the Liberals are doing nothing.
When we talk about aggressive action on tax havens, we are also talking about aggressive action on these digital tax havens, where tens of billions of dollars in profit are made in Canada without a cent of taxation being paid. This is something that absolutely needs to change. We can do better.
I mentioned tax havens a few minutes ago. I already talked about these issues in relation to digital tax havens. Since the adoption of this motion last year, we see that the Liberals have taken very aggressive action, but not against tax havens. In fact, they are promoting these tax havens and expanding them by signing one agreement after another. That is what they are doing even though 90% of Canadians are against tax havens. The Liberals are expanding them.
Last year, they ratified an agreement with the Cook Islands, which is a tax haven in the South Pacific. According to Marwah Rizqy, a professor at the Université de Sherbrooke, “it becomes another option for companies to strategically incorporate and repatriate profits tax free”. André Lareau, professor of international taxation at Laval University, said about the agreement that the Liberals just signed, “It is shocking to see Canada take an approach that diminishes its taxation power”. These quotes were reported by an excellent journalist, Boris Proulx, at the Journal de Montréal.
The Liberals have expanded tax havens by concluding another agreement with another tax haven, which will make us lose even more of our common assets that are part of our common tax base. This will give businesses even more options.
There is more. Last week, we learned that the Liberals signed an agreement with Antigua and Barbuda, another tax haven. The agreement clearly states that, once the agreement takes effect, Canada's taxation laws will apply, which means that the active business income from a Canadian company's foreign subsidiary in Antigua and Barbuda can be paid to the Canadian parent company in the form of dividends that are exempt from Canadian taxes.
In the agreement, the bureaucrat, who apparently does not speak French, kept the mention of the Cook Islands, stating that this agreement applies to companies in the Cook Islands. It is indeed the same agreement that was signed with the Cook Islands, except the names were changed, although this was not done properly. For example, the names were changed to add Antigua and Barbuda.
Last week, the government also signed an agreement with Grenada, another well-known tax haven. It was the same type of agreement. Once again, all they did was copy and paste the agreement. The Cook Islands appear in this agreement as well.
What are the Liberals doing? They are broadening the scope of all of these tax havens.
We might ask what the impact of this is. Let me speak to the impact of a couple of cases I know of.
John, who lives in my riding, has paid his taxes all his life. He managed to accumulate a small pension. However, with the increasing cost of rent, and because there has been no investment by the government into affordable housing, he found it more and more difficult to pay his rent. Can members imagine the impact of realizing that we are not able to keep the apartment that we have loved for so long, after working all of our lives, after paying our taxes, and after establishing a modest pension?
He had to leave. He could not pay for his apartment, so he shared a one-bedroom apartment with a friend. He slept on the couch. That worked for a time. However, these seniors who were trying to share that cramped living space just to keep a roof over their heads were unable to. He was then found by an outreach worker sleeping on the floor of a parking lot in downtown New Westminster because of the lack of affordable housing from the government. When the government gives away tens of billions of dollars, allows tax havens to prosper, and allows 75 CEOs to get $6 million each from a stock option deduction, that has an impact on people like John.
Let me talk about Jim. Jim is just outside the Parliament. Any MP here could go and talk to him. He is on the bridge between the Château Laurier and East Block. Every day he has to beg because there is no pharmacare and he has to pay $600 a month for the medication that keeps him alive. I said to him this morning, “Jim, I'm going to talk about you in the House of Commons.” He said, “Yes, go and fight on my behalf. We need fair taxes and a government that actually cares about us.” Jim is hurt when we send tens of billions of dollars overseas and we cannot pay for a pharmacare program in this country.
The government has gone after persons with disabilities. It is getting rid of the tax credit for persons with disabilities and is asking them to reimburse certain amounts paid by the registered disability savings plan.
I want to talk about one more person, but I will not use her real name. I will call her Edith. Edith has cancer and has a child with a disability.
Instead of going after tax havens, the current government is asking her family to repay all this money, because it changed the eligibility criteria for the tax credit for persons with disabilities. The Liberals are not going after tax havens; they are going after persons with disabilities.
We can do better. We can create a system in which people like Edith, Jim, and John, are treated fairly, and we can create a fair tax system.
The final story I am going to talk about is Jagmeet Singh. He is the new leader of the NDP. He was not born with a silver spoon in his mouth. He had to work when his father fell ill and be the breadwinner for his family. He has grown up understanding that one has to work hard and contribute to one's community. That is what he has done all his life.
He has a different vision. He believes that we need to establish a fair income tax system. Like the 90% of Canadians in a most recent poll done by Canadians for Tax Fairness and Leadnow, he believes that we need to shut down these tax havens, and the digital tax havens as well. He is the kind of leader that we need in this country. He is the kind of person who understands that the Jims, Johns, and Idettes of this country should not be pushed aside but rather supported by the government.
That is really what this debate is about today. It is not about the mechanics of money around stock option deductions, tax havens, or digital tax havens. It is about how Canadians are treated, whether they are treated fairly or not. They have not been treated fairly by the government. We can do so much better. The current government could do so much better. In the budget that will be coming in a few weeks' time, it should crack down on the stock option deduction loophole, and take aggressive action against tax havens and digital tax havens. I hope it does that.
Madam Speaker, I want to congratulate my colleague, the member for , on his new role as finance critic. I also want to thank him, because today is my birthday and, with his opposition day motion, he has allowed to rise in the House to talk about tax fairness, which is very important.
Today I want to talk about tax fairness. That is what the motion is about, and I think it is important. When our government came to power over two years ago, we committed to investing in growth and ensuring fairness for all taxpayers.
Before I get into what we have done to improve tax fairness in Canada, I would like to take a few moments to remind hon. members about the progress we have made so far.
From day one, our government implemented a plan to ensure economic growth, strengthen the middle class, and support social mobility so everyone in Canada can keep moving up in society. We did so by investing in our communities and introducing distinctly progressive measures.
I am proud to say that the investments we made are now paying off. We are seeing definite signs that our plan to boost Canadians' confidence in the future is working. We want them to feel and be better prepared for the future.
With growth averaging 3.2% since mid-2016, Canada's economy is soaring. Our economic growth is stronger than that of any other G7 country. Over the past two years, nearly 700,000 jobs have been created and the youth unemployment rate is near its lowest level ever. The unemployment rate is now at 5.7%, its lowest level in 40 years.
With respect to debt, it is important to remember that the federal debt-to-GDP ratio is shrinking steadily. Canada's balance sheet is the best in the G7. Our government is also working hard to ensure that Canadians have access to opportunities to succeed and that the growth we have seen in recent years benefits as many people as possible.
I would remind hon. members that one of the first things that our government did was lower taxes for nearly nine million Canadians and increase them for the wealthiest 1%. We then put in place a more streamlined, more generous, and better targeted benefit to support families who need it the most in Canada. We did that by replacing the previous child benefit system with the Canada child benefit in our first budget in 2016. In the first year after the child benefit was rolled out, more than 3.3 million families received more than $23 billion. This new benefit helped improve the lives of nine out of 10 families. In the first year of the program, families received on average $2,300 more in benefits for children. It is important to remember that these benefits are non-taxable.
I am proud to say that the Canada child benefit helped lift 300,000 children out of poverty. By the end of 2017, child poverty had been reduced by 40% from its 2013 rate. It should be noted that the Canada child benefit is especially helpful for single-parent families, which are usually headed by a single mother who tends to earn a lower income. Those single mothers are getting the most out of this benefit, which is better targeted and more progressive. I grew up in a single-parent family. According to my calculations, this benefit would have given my mother an extra $1,000 or so a month, tax-free, to raise me and brother. That would have made all the difference to us at the time, just as it is doing today in the lives of thousands of families across the country.
Last fall, when Canada's economic growth was exceeding expectations, thanks in part to the positive impact of the Canada child benefit, we announced that we would continue with the Canada child benefit and build on it in budget 2016 in order to enhance consumers' trust and increase consumer spending. We announced that we would do more and that we would start indexing the benefit to inflation as of July 2018, two years sooner than planned. That means that our government is offering better support more quickly to ensure that the Canada child benefit continues to play a key role in helping families and stimulating our economy. Moving up the date for indexing means that Canadian families will receive $5.6 billion more in benefits from 2018-19 to 2022-23.
This past fall, the government also announced its intention to further enhance the working income tax benefit, or WITB. This is a refundable tax credit that provides important income support and helps offset taxes, supplementing the earnings of low-income earners. It lets low-income workers keep more of their paycheque, encouraging people into the workforce, which has a long-term impact on income security and quality of life. In 2016, the WITB provided more than $1.1 billion in benefits to over 1.4 million Canadians.
To provide even more support and opportunity for lower-income workers, our government proposes to further enhance the WITB by an additional $500 million annually, starting in 2019. This new enhancement will provide even greater support to current recipients by raising maximum benefit levels and will expand the income range of the WITB so more workers can qualify.
Together with the increase of about $250 million annually already set to come into effect in 2019 as part of the enhancement of the CPP, these two actions will boost the total amount the government spends on WITB by about 65% in 2019.
Our government also plans to provide additional support for Canada's SMEs by lowering their federal tax rate.
The small business tax rate will drop to 10% as of January 1, 2018, and to 9% as of January 1, 2019. For the average small business, that means a savings of $1,600 that entrepreneurs and innovators can reinvest in their company and in job creation.
Under this measure, the combined federal, provincial, and territorial tax rate for small businesses will drop from 14.4% to 12.9%, the lowest by far in the G7 and the fourth lowest among OECD countries.
The purpose of these low tax rates is to encourage capital investment in companies, including investments to acquire equipment or more efficient technology, or to hire additional staff, which will make businesses more productive and competitive and enable them to contribute to Canada's economic growth.
This tax cut for small businesses was accompanied by measures to ensure that the benefits of the lower tax rate are shared equitably and that the changes support business owners who invest in their companies, create jobs, and help grow the economy.
For example, in December we issued detailed proposals to simplify and improve the treatment of income sprinkling, which are proposed to be in effect for the 2018 tax year and beyond. The December proposals took into account feedback received from Canadians in the course of the government's consultations on tax planning using private corporations.
As hon. members are aware, income sprinkling involves diverting income from a high-income individual to family members who have lower personal tax rates or who may not be taxable at all. This is not a problem if the family members are making a meaningful contribution to the business. However, in some circumstances, someone earning $300,000, with a spouse and two adult children who do not work in the business, could use a private corporation to get tax savings that amount to roughly what the average Canadian earns in a year, about $48,000. If they are not contributing to the business, this is fundamentally unfair to other Canadians, and the government's proposal to address this practice draws a clear distinction between the two.
To assist businesses in complying with the new measures, the CRA has released detailed guidance on its website that explains how it intends to administer them and what they will mean for taxpayers. I would like to assure the House that the CRA will administer any rules that are ultimately enacted in a way that is fair and that recognizes the reality of operating a small business.
It is also important to note that the vast majority of private corporations will not be impacted by the income-sprinkling measures. Based on the revised proposals, fewer than 45,000 family-owned private businesses benefit annually from income sprinkling. Just to put this in perspective, this represents only about 3% of Canadian-controlled private corporations.
This initiative is consistent with our goal and our desire to achieve greater tax fairness in Canada. We know that we must do more to ensure that as many people as possible benefit from a growing and more innovating economy, which creates more opportunities for success for everyone.
A fair tax system allows the government to keep corporate tax rates low and to help support families through such programs as the Canada child benefit, which I spoke about, or the working income tax benefit.
Addressing the unfair aspects of the tax system is central to our plan for sustainable, long-term growth and also fulfils the basic promise made to middle-class Canadians. Tax fairness is a complex goal that requires sustained efforts on many fronts.
Internationally, Canada is working closely with the other members of the G20 and the OECD to make recommendations in order to address what is termed “base erosion and profit shifting”. This expression refers to international tax planning strategies used by multinational companies to minimize tax payments. For example, some companies will carry out transactions for the sole purpose of transferring their taxable profit outside the jurisdiction where the underlying economic activity took place to another jurisdiction with a lower tax rate in order to avoid paying their fair share of taxes.
Our government is also redoubling its efforts to combat international tax evasion by improving the exchange of information between tax administrations. Under the common reporting standard developed by the OECD, the automatic exchange of financial account information held by non-residents is an important tool that promotes compliance with the rules, combats international tax evasion, and ensures that taxpayers report their income from all sources. To date, more than 100 administrations have committed to implementing the new standard.
These measures represent real progress, but our government will continue to identify and combat tax evasion and aggressive tax avoidance to ensure that the system is working as effectively and equitably as possible.
As we continue to implement this plan, making strategic investments and promoting greater social justice, we will continue making our tax system one that is as fair and as equitable as possible for all Canadians.
I think it is always useful and important to remember the potential cost of failing to take action to make our system fairer. An unfair tax system undermines public confidence. We need to have rules that are fair for everyone. The government must take steps to ensure that tax rules apply in a way that is equitable and in line with their original intent. For that reason, as our government lowers the small business tax rate to 9% by 2019, we must also ensure that this tax cut helps small businesses invest in their operations, create more jobs, and grow our economy. It is not meant to give the wealthy another tax advantage that is out of reach for most Canadians. As the economy continues to grow, everyone must pay their fair share and everyone should benefit from this growth.
Madam Speaker, it is a pleasure for me to rise and speak to this motion. I want to congratulate the previous speaker, the parliamentary secretary, I understand it is his birthday. It must be nice to finally be able to have a drink in the province of Ontario. That is good news for him, but perhaps not as good news for his constituents.
We have a motion today brought to us by the NDP which asks the government to follow through on one of its commitments with respect to stock option deductions and tax havens. There may be aspects of the motion that one could sympathize with. Ultimately, we know that the NDP as well as the Liberals are eager to raise taxes at every opportunity. Conservatives are not supportive of the motion, but certainly we are sympathetic with the fact that the NDP thinks that the government should keep its promises.
In principle, the government made many different kinds of promises to people with different kinds of philosophies trying to basically promise everything to everyone. Of course, that is a little harder to do when the party is in government. I am going to talk today about how the government is increasing taxes across the board. I am going to counter some of the arguments made by the parliamentary secretary and I am sure he will enjoy hearing them. Then I am going to talk about the broken promises.
With respect to the issue of taxes, the parliamentary secretary painted a picture for us of the alleged progressivity of the government when it comes to tax policy, allegedly how the Liberals want to help people with lower incomes by lowering their taxes while increasing taxes for the wealthy.
The facts paint a very different picture. Frankly, this narrative created by the government is total malarkey. I should not say malarkey; it is “people-larkey”. It is total nonsense in any event. The Liberals say they are interested in lowering taxes for lower-income Canadians, but let us point out the reality.
Conservatives lowered the lowest marginal tax rate when they were in government. The Liberals have not touched the lowest marginal tax rate. If people are making $45,000 a year or less, they are indisputably paying more tax under the current government. The Liberals only went for the middle rate, not the lowest rate. It was Conservatives who lowered the lowest rate.
The Liberals also reduced the amount of money a person can put toward a tax-free savings account. This is important because tax-free savings accounts are the preferred savings vehicle of relatively lower-income Canadians. Why is that? I talked about it in previous speeches. When Canadians are looking at saving their money, they look at the relative advantages of various savings vehicles that exist. They look at something like an RRSP or a TFSA, and they assess the merits of them. We see clearly from the data that there are certain financial incentives associated for people with modest incomes making greater investments in TFSAs. Again, an advisable investment decision will vary depending on the individual, depending on the situation, but in particular, the government's ideological opposition to TFSAs and its desire to reduce the amount an individual can contribute to it has a disproportionate impact on Canadians who are in that middle- and lower-income level.
Again, in terms of what the Liberals have done with respect to tax rates, as well as what they have done with TFSAs, again it is a tax agenda that is very bad for, to use their verbiage, the middle class and those working hard to join it. Part of the problem is that they still never told us what in their minds it means to be middle class. They say that they are trying to help this group of people and yet they cannot even provide us with a definition of who qualifies as being in the particular group they are trying to address. That may lead to some of this confusion where again they are undertaking tax policies which very clearly do not appear to actually impact those who they claim they are going to impact.
Very often we see with the Liberals that the policies they undertake hurt those they are supposed to help. While the is off taking an illegal vacation, the Liberals are raising taxes on those who will actually have to pay for that illegal vacation through things like security costs.
Of course, who could forget the carbon tax? When it comes to the government's interest in raising taxes, this is of particular concern in my province of Alberta, but it is a concern across the country. The government is trying to force provinces to introduce a new tax. It is threatening them with punitive taxation if they do not follow along with the federal directive, even if it is an area that is clearly within provincial jurisdiction.
One of many problems with the carbon tax is that there are many Canadians who need to use fuel, who need to use energy in some way and simply cannot eliminate these costs. In Sherwood Park—Fort Saskatchewan, on a typical day in the winter it is -40°C. It is a great place to visit but it gets cold. People who live there cannot just decide they do not want to heat their home because of the carbon tax. That is not a realistic choice a person could make.
Some might say that the tax burden could be reduced through retrofitting and things like that, but people with a modest income may not have the capacity up front to do that retrofitting. One of the things we did when the Conservatives were in government was we brought in a home renovation tax credit to actually make it easier for people to make those investments in retrofitting. That was not a punitive approach; that was an approach that helped people have the resources to make the kinds of improvements they want.
The Liberal government's approach is always to punish people through taxation to try to get them to behave in what the Liberals imagine to be a socially desirable way. However, the Conservatives' approach was to provide support and tax credits so that people could make those kinds of decisions on things like doing home retrofits.
It could be said that from an environmental perspective, instead of driving, people should aim to take public transit. However, for many families, some with a large number of children, it is not nearly as practical or as easy to go pick up groceries or something like that. Even if they are paying this punitive carbon tax, there are simple realities of family life especially in a cold climate. The carbon tax for many Canadians is not helping them to reduce emissions; it is simply a punitive tax. They now have to pay more money to the government which makes their situation more difficult.
There are many different examples, such as the elimination of tax credits around public transit and other areas, that have simply made life so much more expensive for families. There have been independent assessments of this that show that Canadians at all levels are paying more tax under the government.
My friend the parliamentary secretary referenced this whole issue of the impact of the child benefit. This is another Liberal talking point about Conservatives sending cheques to millionaires. Let us be very clear. The Conservatives had a taxable benefit. Anyone would tell us that relatively speaking, taxable benefits, at least with all things being equal, are more progressive because we have a progressive tax system. Yes, people who have a child will get a child benefit regardless of their income, but it is taxable, and it is taxable on the income of the spouse who earns the lowest income.
The Liberals' approach to this through the tax changes they have made is that they are not going to give cheques to people who are in the very wealthy category, but at the same time, the Liberals are lowering their taxes by lowering the middle marginal rate, providing no benefit to people who are at the bottom. The effects of the change to the middle rate relative to the impact on removing the UCCB for a person at the top end is, at best, a wash.
The Liberal government's arguments around progressivity clearly do not fit. Again, the Liberals are hurting the people they claim they intend to help with their tax policy. When we have motions or proposals for increased taxes, again, generally speaking, we see who pays this.
When the government initially reneged on its promise to lower the small business tax rate, and that is one of the only promises that it unbroke its breaking of, it trumpeted that unbreaking as if it was a brand new commitment. However, when it first broke that promise, the point was made that when taxes are increased on small businesses, it does not just affect the business owners, but it also affects the people who work for that company. It makes it harder for small businesses to expand, to hire new people.
Many Canadians work in the small business sector. The government's targeting of tax increases to these businesses, as well as the regulatory changes that it proposed, some of which it is following through on, very clearly hurts the people the Liberals claim they are trying to help.
By contrast, what was the approach of the previous Conservative government? The government claims now that the previous government was lowering taxes on the wealthy. I defy the Liberals to give us one example of a tax change that was made that particularly affected the wealthy.
What taxes did we increase? We lowered the lowest marginal tax rate, we lowered the GST, we lowered business taxes, and we provided tax credits and we provided a universal child care benefit. Of course, when we lower the lowest marginal rate that provides some reduction to someone who is at the high end because everybody pays that lowest marginal rate. However, lowering the lowest marginal rate disproportionately provides an advantage to those who are of more modest means.
Of course, GST is the one tax that everybody pays and we lowered the GST from 7% to 6% to 5%. It is pretty well established that when we lower business taxes that does not just help businesses, that helps union pension funds that invest in business, and that helps workers and helps consumers, but at no point did the Conservatives propose or implement a reduction in the top or even the middle marginal tax rate. We lowered the lowest marginal tax rate, we introduced tax credits, and we lowered the GST.
If the government members think that is not true, I invite them, in questions and comments, to point out the case where we did that. That is either malarkey or “people-larkey”, depending on how progressively one uses the language.
I want to get on to talking about another important issue that is raised by the motion, which is how the government shamelessly breaks all kinds of different promises. Clearly there is far too much on this front to go into all at once. It is interesting that the NDP motion points out that the government voted for a resolution. As it happens, we voted against that resolution at the time. We have been clear and consistent in terms of our position when it comes to increasing taxes, but the government voted for this particular resolution and then it did not actually move forward to implement it. This is again an example of the government wanting to send a signal but to do so in a very disingenuous way.
Certainly, there are parties in the House that take strong convictions on issues and they may be different from each other but often what we see from the Liberal government is simply wanting to send good-feeling signals to all different kinds of sectors without ever actually taking some action.
Since we are talking about taxes and the fiscal area, the first broken promise we should highlight is the fact that the Liberals promised three $10 billion deficits and then a balanced budget in the fourth year. My friend from the NDP talked about the government having attention deficit when it comes to implementing its promises. That is not the only deficit problem the Liberals have but it is one of them.
During the election, we were very clear that we were skeptical as to whether the Liberals would actually follow through with this, yet they opened the door to deficits and said that they were not going to say no to any spending proposals, except to veterans. The Liberals seem to have the attitude that, with the exception of veterans, they will not say no to anybody, and they are spending all sorts of new money. We are way over that $10 billion target and we are way over that target of balancing the budget within three years. The government now has absolutely no plan to get back to a balanced budget, not in the short term, not in the medium term, and not in the long term.
Of course, there are some people who argue that there is logic to deficit spending in certain situations. Certainly in a time of financial crisis there is good logic in running a deficit and then balancing that out with surplus during good times, but is has to be balanced out at some point. When there is a long-term permanent plan to always run deficits, I am not sure of any economic theory that supports the idea that they can just spend more than they take in, in perpetuity.
The Liberals have all kinds of defences and justifications for this. At the end of the day, it is very clear that they have broken a promise. It also needs to be underlined that although Canada has relatively low federal debt to GDP compared with other countries, our total government debt to GDP is comparable to many other countries. Here in the province of Ontario, this is the most indebted sub-sovereign borrower in North America and perhaps on the planet. We have provincial governments that deliver a lot of services compared with what sub-national jurisdictions deliver in other countries around the world and in some cases they are taking on a great deal of debt.
Since the election of the NDP in my province, we have had the introduction of new taxes, such as a carbon tax, but we also went from a time where Alberta had paid off all of its debt to a situation where we are again dealing with big problems with respect to deficit and debt. It is unfortunate when this happens because it is governments forcing the next generation to pay for the services and the spending of the present, plus the extra costs associated with it.
The current government went to Canadians with a proposal for a deficit of $10 billion over three years and then a balanced budget. Canadians do not have an opportunity to pronounce on individual promises; rather, they take platforms and programs as a whole. However, about 39% of them voted for a government that said it would run a $10 billion deficit. The government has completely broken that promise and I think many Canadians are concerned about it.
Speaking of the percentage of Canadians who voted for the current government, another promise that it made during the election that it has now reneged on was with respect to changing the electoral system. We have had a great deal of debate in the House about that issue. However, the way in which the government broke its promise was quite disingenuous. There was a committee process that heard from Canadians, that did a lot of good work and put a lot of time in. In the end, most of the parties represented in that committee agreed to a basic framework. They did not necessarily agree on the desired outcome, but they did agree to a basic framework, which was that there should be a referendum of all Canadians that would give them a choice between the status quo and a system that had some greater degree of proportionality. That was what came out of that committee report.
However, the government did not like that because through this electoral reform discussion it was quite clear that it wanted to move to a system that was actually less proportional and that was uniquely advantageous to the government. Therefore, immediately after this, it undertook this new and ridiculous other form of consultation, which did not actually ask people for their opinions but asked the sort of touchy-feely questions that were notionally related to electoral reform. My colleague from said it best. He said that this was, “like being on a dating website designed by Fidel Castro.” It asked all kinds of emotive questions without actually asking for opinions, and regardless of what one put in, it always came to the same conclusions. This very compromised process was the government's justification for tearing up its commitment with respect to this electoral change entirely.
I have written a whole list on this sheet of paper of broken promises to talk about. I have only talked about two of them, and I do not know how much time exactly I have left. Let us see how many more I can get through.
The government had promised to show greater respect for Parliament. What have we seen by contrast? We have before us today a motion that is the re-asking of a motion that already passed in the House. It was a motion that, as it happens, the Conservatives voted against. However, it did pass in the House and the government members voted in favour of it. Now it is coming forward again. Why? Because there has not been action on something that the government said it was for. If it was not going to do it, it should have at least been willing to be up front with Canadians in terms of how the Liberals voted.
Formally, these motions that we pass are not binding on the government. However, we would expect the government, especially when it votes for something, to think about whether or not it is going to do it when it evaluates how it is going to vote with respect to a particular measure.
A particularly frustrating thing in terms of respect for Parliament is that we have a convention in this place where when party leaders ask questions of the , if he is present, he answers those questions. Well, it is not that he answers the questions, but he at least stands up after the question is asked and responds to the question. One could debate whether the previous prime minister answered the questions. I think he answered the questions very well, but he always responded to the questions. The member for knows that whenever the previous prime minister was here, when he was asked a question by the then leader of the opposition, he stood up and responded to the question that was asked.
However, we now have a situation where the current , even when he is present, and I will not comment on how often that happens because it would be unparliamentary to specifically refer to the presence or absence of the Prime Minister in the House, very often does not answer the question, even when specifically asked questions by the opposition.
I could go on, but I know I am running out of time. There are so many instances where the government has failed to keep its promises. This is yet another example. Certainly, Canadians are frustrated by it, which is why they are going to throw the current government out in 2019.
Madam Speaker, I will be splitting my time with the member for .
It has almost been a year since Parliament passed a motion asking the government to keep its promise to Canadians. That promise was to cap the stock option deduction loophole used by wealthy Canadians to not pay their fair share of taxes, and to take aggressive action to combat tax havens where corporations and wealthy Canadians put their money as a way to not pay taxes here in Canada. The government has yet to do either. This is a huge disappointment to people in my community.
It is almost time for another budget and the government has an opportunity to finally tackle the tax havens that siphon off billions of dollars of government revenue. It can also finally close the stock option deduction loophole that allows the wealthiest Canadians to avoid paying their fair share of taxes.
The Canada child benefit was supposed to lift nine million children out of poverty. Sadly, the very same kids the government claims to be helping are not even receiving the benefit. I know that because I have asked that department directly. It cannot tell me, it cannot tell us, and it cannot tell Canadians if all of the eligible families are actually receiving the benefit.
In my riding, countless stories of single mothers are being asked to go to ridiculous lengths just to submit a claim, and of those already receiving it, it is being suspended for no good reason.
Families in my riding have lost their homes because of not receiving the Canada child benefit for which they were eligible and who only finally received it because of the help from my office. I even had members of a family agree to go on national TV to talk about their horror story with the CRA. The day after that they appeared on TV, Canada Revenue Agency called them, something they had a hard time receiving before, to say that they would be receiving their Canada child benefit.
My office helped one young single parent receive her Canada child benefit. She had provided the CRA with 75 pages of documentation to prove her eligibility and she was still denied the benefit. Obviously, this is beyond unacceptable. What many parents are forced to go through to prove their eligibility is cruel. There is something seriously wrong here.
This is a tragic illustration of the growing inequality in our country. Families struggling to make ends meet are being made to prove and prove again their eligibility, yet millionaires who wilfully defraud the government are given a free pass.
Why is there such a double standard in the way the Canada Revenue Agency treats Canadians? We have sweetheart deals for rich Canadians who have been caught not paying their taxes and penalties for the rest of us.
There are not many millionaires in my community of Saskatoon who have a need for tax havens and not many people who own stock options to use them to pay less tax. However, a lot of people in my riding cannot get service at a counter of Canada Revenue Agency anymore because it has been closed. They also had a lot of trouble simply getting a form at tax time last year.
I wrote to the minister about these problems last year. I am glad to see that some improvements have been announced for this coming tax year. However, the best news would be if the government would announce its intention to make our tax system fairer for everyone.
The vast majority of Canadians would like their government to plug the stock option loophole and track down the lost billions of dollars that have been socked away on Caribbean islands.
Here are a couple of examples of the stark income and wealth inequality in Canada that our tax system is perpetuating. Just two Canadian billionaires own the same amount of wealth as nearly 12 million Canadians. That is one-third of the population of Canada, which is unbelievable. These two Canadian billionaires have $33.1 billion, and that is U.S. dollars. By lunch time on January 1, Canada's richest CEOs earned the same amount as the average Canadian earned in an entire year.
A recent study by the Canadian Centre for Policy Alternatives shows that 59 tax measures that mostly benefit people above the average income level in Canada costs the government more than $100 billion in one year.
In most of Canada, profit from stock options is considered a capital gain and therefore it is taxed at half the rate of regular employment income, the kind of income most of us earn and claim on our income tax. Also, although it had different purposes at the beginning, this tool is primarily used, and we have heard the stats, by Canada's ultra rich as a way to simply pay less taxes. Stock options now make up almost 25% of CEO compensation at Canada's top 60 publicly-traded companies. This costs federal and provincial governments close to $1 billion each year.
I would like to note that Quebec applies the standard provincial income tax rate to profit from stock options. For that, bravo, and I ask the federal government to follow that lead.
The use of offshore tax havens by Canadian companies and wealthy Canadians is at its highest in history. It costs Canadians between $5 billion and $8 billion each and every year.
A year ago, the NDP asked the to not only address the imbalance that existed in how CRA treated the top 1% and the rest of us, but also to take concrete and immediate action to recoup the billions of dollars lost to tax fraud and tax havens, dollars that could be funding health care, education, and infrastructure. They could be used to fund more affordable housing, a national free prescription drug program, affordable child care, and a fair living wage.
Imagine if everyone paid their fair share, instead of just some of us. However, because the government refuses to collect billions of dollars lost every year, we cannot do the things we need to do.
Yesterday, I met with Colton, Chance, and Charlotte, three brilliant students who were representing the Canadian Federation of Students. They came to talk to me about how the government could really help students pursue their dreams of post-secondary education, to realize their potential, and to pursue their careers. I want to thank them for bringing to my attention what would be possible for a government that really wanted to help students. Lo and behold, they proposed eliminating the stock option loophole as a way for the government to have the needed revenue to help students.
Here is an example they shared with me.
Because of the decrease in government funding over the last 10 years, 10,000 indigenous students are currently waiting to exercise their treaty right to post-secondary education. The government promised, while trying to get elected, that $50 million annually would be added to current funding to address this backlog of students trying to get an education. By simply eliminating the stock option deduction loophole, the government could fund its promise to students. It could help these students with this one measure for the next 15 years.
Before Christmas, I had the honour of meeting women in the trade journey program at the YWCA. These are mostly young women with children, exploring careers in the trades. We had a great discussion. We talked about what would really make a difference for them, for women in these traditionally male-dominated professions. They said affordable, accessible child care was key for them to pursue their post-secondary education to realize their dreams of becoming journey persons. They did not understand why their government did not seem to understand why child care was so important to their success as parents and as journey persons.
We have a national housing strategy that cannot end homelessness, not even in 10 years. Just half of those who are homeless will be helped. The other 50% are literally going to be left out in the cold. Just a fraction of the billions of lost revenue would make a huge and immediate difference, and we could actually make homelessness history.
It is a simple equation. By ensuring all Canadians pay their fair share, by not giving wealthy Canadians a free pass, by ending the stock option deduction loophole, by simply collecting taxes owed, the government has an opportunity to match its words with actions. I look forward, ever hopeful, that the 2018 budget will be a budget for all Canadians and not just a few.
Madam Speaker, I rise in the House often, but this is the second time in a little less than a year that I rise to speak on behalf of the people of Trois-Rivières that I represent, the vast majority of whom are working very hard to make ends meet. Every year, these taxpayers pay their taxes as they should, as they will again very soon, and this helps fund essential public services to promote social justice and build a more inclusive Canada.
Tax fairness is at the heart of the NDP's political action. I would even say that under the leadership of Jagmeet Singh, we are the champions of social justice and tax fairness. That is why we are shining the spotlight on the problem of tax evasion and proposing tangible solutions to try once more to put an end to it.
On March 8, 2018, the House adopted a motion calling on the government to do something about the tax giveaways to the wealthy and keep its promise to cap the stock option loophole. That is just another broken election promise.
I think there are three kinds of people who make promises or three possible outcomes. This first category is people who say “yes” and take action right away. People are remembered for that, because their word means something. Then there are the kind of people who say “yes”, but they drag their feet and need constant reminders, and we have no guarantee that their word will actually result in any action. Finally, there are the lost causes, those who say “yes” to look good, and perhaps they agree with the principle, but are completely incapable of taking action.
Frankly, I reluctantly put the Liberal government somewhere between the second and third category, that is, between those who drag their feet and the lost causes. I will give it a few more weeks to see whether the Liberals actually put their money where their mouth is in budget 2018. If it becomes clear that that is not the case, the only logical conclusion is that the Liberals are all talk and no action.
If Canadians really want a government that listens to workers across the country, regardless of their income, perhaps they should listen to the NDP's proposals the next time. I almost said “a middle-class government”, but I will refrain from using that term because it is hard to define. I will do everything in my power to make sure that these proposals are clear and well defined.
A few months ago, I gave a speech that called on my fellow MPs to support this motion. We were victorious, but only in the sense that the motion was adopted. When it came to taking action, the government did the opposite of what was called for in the motion. The government told us that it would close the loopholes and make sure that everyone pays their share of taxes in the interest of fairness, but the next day, it continued to sign new agreements with tax havens. I would be hard pressed to find a better example of talking out of both sides of one's mouth.
I am therefore rather dismayed to be rising in the House again today to speak in favour of social justice. I hope that this time I will be heard. I almost fear a second victory in the House if it means, again, that nothing will be done.
On this opposition day, I ask my colleagues to support our new motion, which calls upon the government to keep its promise to cap the stock option deduction loophole and to take aggressive action to combat tax havens.
We hope that budget 2018 will include pragmatic measures to deal with tax fraud, particularly with regard to capping the stock option deduction loophole. We are losing $800 million to $1 billion a year.
I wonder if my colleagues can imagine what we could do with $1 billion a year. I certainly can. I have so many ideas, in fact, that $1 billion just might not be enough. It is truly outrageous to be forgoing this revenue.
Why are stock options a crucial issue? For those who might not be familiar with this strategy, under this system, a CEO can buy shares in a company that he is running and then sell those shares at the right time, when he can turn a profit. The benefit he gets from that is considered a capital gain. He will then be taxed at half the rate of ordinary income. When tax season comes around, they usually have only one form, a T4, that states they have one job, one income, and they pay their fair share of income tax. The federal government encourages big businesses to apply this strategy, because CEOs that do pay 50% less tax on gains from the sale of their shares.
Because of this tax loophole, the federal government and the provinces lose $1 billion every year. Instead of giving to wealthy CEOs, the Liberal government should work now, by adding a simple line in the 2018 budget, to ensure that the interests of all taxpayers of this country are respected. For instance, this $1 billion could fund research that would finally, once and for all, establish a standard on pyrrhotite in concrete and allow thousands of local families to get out of the hellish situation they have been in for years. It could quickly fund an overdue announcement by the Liberal government to publicly fund VIA Rail’s high-frequency rail project that would connect Quebec City and Windsor, with a stop in Trois-Rivières. It could also be used to increase health and education transfers.
Speaking of salaries, the riding I have the honour to represent has an unusual characteristic. We have a large number of seniors. My riding's rate is three to four points higher than the average in other regions in Quebec. I have never had a single senior come to tell me that he or she is drowning in money. It is just the opposite. I often hear about seniors having trouble accessing the guaranteed income supplement. These people are living a modest lifestyle, barely above the poverty line, on their meagre pension income, even though they spent years working to develop our society.
In my region, as in others, people are struggling to live decently, and meanwhile, the wealthy are earning even more money. There is a real injustice here that we need to address. I am not saying that everyone should have the same income. We are not communists. We are saying that all Canadians should pay their fair share according to their income. This makes sense. The Liberals talk about their tax cuts and the TFSA contribution limit, and meanwhile, some people in my riding have never even heard of a TFSA or RRSP. When they file their tax returns, they generally do not have enough money to invest in savings that would give them a little more monthly income in retirement. They are light years away from this reality.
When the Liberals brought in their tax cuts, they forgot all about the first tax brackets that are financing the government's deficit. We know that the tax increase on the wealthy is not enough to finance the Liberal government's offer. Studies show that the wealth gap continues to grow year after year. Anyone can see it.
It is time for this government to put its words into action and to follow through on its commitments. When the time comes to vote, it should vote “no” if it opposes the NDP's motion, or vote “yes” and take action.
Madam Speaker, I want to begin by reiterating that our government is fully committed to fighting tax evasion and aggressive tax avoidance. We are fully committed to ensuring that our tax system is transparent, responsive, and fair.
Our government recognizes that Canadians work hard, and expect their government to do the same to ensure that everyone pays their fair share. I would like to inform the House that Canada has one of the highest voluntary tax compliance rates in the world, with more than 90% of Canadians paying their taxes on time each year. The vast majority of Canadians work hard and follow the law.
Thanks to the millions of Canadians who pay their taxes every year from coast to coast to coast, we have provided health care, built libraries and schools, helped advance scientific research, maintained roadways, and provided access to clean drinking water. Canadians have worked hard to create a Canada that we are proud to live in. We have reached all this because Canadians pay their fair share of taxes.
However, there are those who are not willing to do their part, and avoid paying their fair share. It is unfortunate to know there are individuals and companies who try to avoid their tax obligations, and who avoid putting their share into the programs and services that all Canadians, including them, benefit from.
That is why cracking down on aggressive tax avoidance and tax evasions continues to be a priority for our government. Not only is it against the law, it is unfair to the millions of honest Canadians who pay their fair share. Tax cheats rob the government of the revenues it needs to deliver the programs that Canadians have come to rely on and need to improve their quality of life. Middle-class Canadians and those working hard to join it, who pay their fair share of taxes, rightfully expect the government to do its part to combat tax cheating.
This is why our government is taking historic steps to combat tax evasion and aggressive tax avoidance. Funded by the investments of close to one billion dollars in budgets 2016 and 2017, we are transforming the Canada Revenue Agency into an organization that delivers results for Canadians, especially when it comes to delivering a fair tax system. This is what Canadians expect, and it is something that we will continue to deliver.
We believe Canadians deserve transparency into our efforts in fighting tax evasion and aggressive tax avoidance. I would like to thank the finance committee for its recommendations. That is why we have made good on our commitment to be more open and transparent by making more information available to taxpayers about the results of the Canada Revenue Agency's compliance activities.
We have established a new level of transparency to report results to Canadians and to show would-be tax cheats the serious consequences of taking part in tax evasion and aggressive tax planning. These efforts also help deter those who may be considering abusive tax schemes that give false and misleading promises at the risk of legal consequences.
Transparency and education are not enough. That is why our government is also working diligently to identify those taxpayers who pose a risk to the integrity of the Canadian tax system and to take action. Thanks to the investments made in the last two years, the Canada Revenue Agency has now more auditors and better tools to detect and combat tax evasion and aggressive tax avoidance.
We expanded our specialist audit teams that consider all multinational corporations for audit every year, and who focus on tax plans and status of ultra-high net-worth taxpayers. There is more. The Canada Revenue Agency's criminal investigations unit has undergone important changes to make sure serious tax evasion cases, such as those involving offshore transactions and money laundering, are referred for criminal prosecution. Such investigations are very complex. They may take several years to resolve and make their way through the courts.
It is clear that our plan is working. From the start of our mandate in 2015 through September 30, 2017, for offshore files alone, as of December 31, 2017 the Canada Revenue Agency has been conducting audits on more than approximately 1,100 taxpayers, and is criminally investigating more than 20 cases of tax evasion.
It will continue to apply penalties to all those cases of serious tax non-compliance. We are aggressively pursuing each and every case to make it clear to tax evaders, no matter where they are that the consequences and penalties of tax avoidance are severe.
However, this is just one part of the solution. Tax evasion and aggressive tax planning are complex issues, and combatting them requires long-term concerted efforts. Furthermore, the issue of tax havens demonstrates quite clearly that tax cheating remains a significant global multi-billion dollar issue that transcends borders.
As a result, Canada is working closely with our international partners to share and receive information. We are making it far more difficult for wealthy individuals and corporations to hide money in offshore jurisdictions and avoid paying their fair share.
I am very proud to report that our efforts are paying off. We have access to more domestic and international financial account information than ever before. Already, Canada has one of the most extensive tax treaty networks in the world. We have improved our ability to link information from various sources, domestic and international, so we can better identify those taxpayers most likely to be avoiding their tax obligations.
We will close in on any wealthy individuals or corporations that try to avoid paying their fair share of taxes. While the confidentiality provisions in the Income Tax Act prevent the Canada Revenue Agency from commenting on specific cases, through our collaboration with international partners we have been identifying and taking action against those who are evading and avoiding taxes and breaking the law.
In 2017, the Canada Revenue Agency began receiving country-by-country reports from multinationals to help spot profit shifting, and more information to risk assess taxpayers who may be aggressively avoiding or evading taxes offshore. Furthermore, we will begin to receive international banking information in 2018. Canada will be able to automatically exchange information with other countries to identify taxpayers with offshore accounts, through the OECD's common reporting standard.
With focused efforts and changes to the law, Canada shut down some gifting tax shelter schemes that at one point included more than 48,000 participants. We want a tax system that is fair for all Canadians and we are taking steps needed to make this a reality.
Additionally, thanks to the investments made by our government, the Canada Revenue Agency's large file risk assessment systems were also featured globally by the OECD in 2017. They are world-class and global best practices, which is why Canadians can be proud that other international tax administrations are looking for Canada to help improve their systems.
Canada's leadership and contribution to international best practices in this area is providing Canadians with a revenue agency that is a world-class tax and benefit administration. Canadians expect no less from us, and we are delivering on our promises. As a result of system improvements, we now have the capacity to risk assess 100% of large business tax returns filed every year; therefore, improving its ability to identify high risk transactions, and to ensure that those who choose to break the law are exposed and made to face the consequences.
Our government is also focusing on promoters of abusive schemes, and wealthy taxpayers who can afford to pay for the expertise to navigate the tax laws. We have levied approximately $44 million in penalties in 2017 to tax professionals who facilitate these schemes. We are making it absolutely clear that we are not just going after tax evaders, but those who actively are involved in aggressive tax avoidance.
The government has also put in place a paid informant program, and has access to all international electronic fund transfers over $10,000, and is analyzing the data in conjunction with other business intelligence.
The CRA is using a jurisdiction and/or financial institution of concern approach to identify high-risk transactions and potential offshore aggressive tax avoidance and evasion, and has committed to reviewing all international EFTs to and from four offshore jurisdictions and financial institutions of concern per year. Canadians can be proud that, thanks to our government's actions, Canada plays a key role in international intelligence when it comes to combatting overseas tax abuse.
All of these efforts and results serve to underline why the Canada Revenue Agency does not need to depend on leaked lists, such as the paradise papers, to fight tax evasion and aggressive tax avoidance. Thanks to our government's historic investment in the Canada Revenue Agency, the agency is already well under way in carrying out its work in identifying and pursuing those who are not paying their fair share long before the leak occurs.
Furthermore, in December 2017, the announced the tightening of the voluntary disclosures program to reflect our confidence in detecting aggressive tax planning. These tighter rules will mean that individuals who participate in sophisticated tax planning will face the full consequences of their actions and do not simply get to walk away from paying the taxes owed. This decision means that cases may take longer, but we believe that this is just one option, and the one that Canadians would expect.
The Canada Revenue Agency has also begun to review selected neighbourhoods to better compare lifestyle to income, particularly where corporations, trusts, or non-residents own residential property. This will help us to better identify the taxpayers who are most likely to be avoiding their tax obligations.
Our government has laid some extremely important groundwork. It is early, but as the Canada Revenue Agency works through an ever-growing roster of audits and investigations, the analysis of recent data leaks and international benchmarking tells us that we have made progress on detecting and taking action.
Voluntary payment of tax, which is the ultimate goal of compliance work, continues to show upward trends. Canadians work hard to support their families and pay their taxes, and the Canada Revenue Agency is working hard to ensure that nobody avoids paying their fair share. Our effort is crucial in ensuring that the Government of Canada can deliver the programs that hard-working Canadians rely on and deserve.
What remains an issue is the aggression and motivation of those undertaking aggressive tax planning. The battle is now the issue of legal challenges to conducting audits, requests for information, as well as legal challenges to exploit unintended loopholes. Aided by a historic investment, the Canada Revenue Agency is working to address this through more resources, better data, and better approaches to make sure that those who choose to break the law face the consequences. The Government of Canada will not stand by and let those who choose to cheat drain resources from the services that need funding to improve the quality of life for all Canadians.
All of these efforts outline the Canada Revenue Agency's continued excellence in service, compliance, integrity, security, and innovation. The agency continues to improve its transparency and accountability to Canadians. No one is above the law. There are millions of hard-working Canadians who follow the law and pay their fair share, and they rightfully expect others to do just the same. That some individuals and companies continue to try to evade their taxes is unacceptable. This is why our government will continue to work hard to crack down on tax cheats. Canadians expect nothing less, and it is what our government will continue to deliver.
Mr. Speaker, I would first like to inform you that I will be sharing my time with my colleague, the esteemed member for .
Tax evasion deprives families of hundreds of millions of dollars that could be invested in good social programs. It is time to put an end to this strategy that benefits only the wealthiest Canadians. The Liberals promised to tackle this problem. On November 6, the himself even said that the government is working every day to make sure that all Canadians pay their income tax. I have my doubts.
When we talk about tax avoidance, we are talking about several billion dollars out of our coffers. Statistics Canada, an extremely credible source, estimates that tax avoidance costs Canada $8 billion a year. That is $8 billion a year lost in uncollected taxes because we have agreements with the Cayman Islands, Barbados, the Cook Islands, and so on. The list is a long one.
Imagine all the problems we could solve with an additional $8 billion a year. Here are a few examples. We could help 10,000 families upgrade their homes to improve energy efficiency. Those 10,000 families would see their energy bills drop, and there would be a reduction in greenhouse gas emissions. We could help the most vulnerable members of our society by maintaining 800,000 social housing buildings for 25 years. We could take stronger measures to lower the price of prescription drugs for Canadians and increase health transfers to the provinces. We could implement a guaranteed minimum income. These are concrete measures that would help reduce inequalities. We would be helping the middle class and all those who are working so hard to join it. That is progressive.
I just cannot get over it: $8 billion. That is $8 billion in 2015, $8 billion in 2016, $8 billion in 2017, $8 billion in 2018, and $8 billion in 2019. That is $40 billion lost this term alone. That is $40 billion out of the public purse, and, most importantly, massive amounts that we cannot invest in health transfers, social housing, the fight against homelessness, infrastructure, and more.
I was recently appointed infrastructure and communities critic. I am proud of this role and the trust placed in me. As a former municipal councillor, I am intimately familiar with infrastructure needs, which are huge. During the election campaign, the Liberals built up great expectations in the 25 municipalities I represent. They informed us that there was an infrastructure deficit, as if we did not already know, and said we have to invest in our water and sewer infrastructure, our bridges, and our roads. When I was a municipal councillor, some of the sewers in the ward I represented were 100 years old and were made of brick.
People were hoping to see billions in infrastructure investments in Quebec, Ontario, or British Columbia. The revenue we are missing out on year after year because of aggressive tax avoidance and tax havens would cover the cost of two Champlain bridges or thousands of community centres in communities that really need them, such as Saint-Pie, which has been waiting for many years, and other places in my riding.
Public concern about tax evasion and tax havens is growing. My colleague from and I got together on this. I invited my constituents in Saint-Hyacinthe and Acton Vale to come talk about tax havens and tax evasion. My invitation was very clear. I invited them to come watch a documentary called The Price We Pay. Those who looked it up learned that it was a one-and-a-half-hour documentary set mostly in London and elsewhere around the world, and our presentation was mainly in English with French subtitles.
I represent a largely francophone riding, and yet nearly 100 people showed up on a wintry Thursday evening to watch this documentary. We had quite a long discussion about it. I thought they would never leave my office because they were so concerned. They are outraged that the government is not doing anything about this situation.
I quite often hear from constituents about tax havens, inequalities, and tax evasion. People tell me how unfair it is that companies manage to avoid paying taxes, while these people work so hard and pay their fair share. They are so right.
I want to share a quote from an email I received from one of my constituents a few weeks ago:
|| We need to get rid of tax havens and make companies pay their fair share. These companies earn billions of dollars and pay less tax than ordinary taxpayers. They send their profits to tax havens, when this money could be put towards major projects in our country.
|| So many sectors are in need of reform, and the government will not do it. The past 28 months have shown that the Prime Minister has forgotten his election promises.
My constituent took the time to write that, and it is so true.
In a few months, it will be time for us to do our taxes. Many will have to tighten their belts, while the wealthiest Canadians can afford tax accountants and big law firms to avoid paying taxes. I quote Brigitte Alepin, a leading Quebec tax expert:
|| When ordinary citizens pay on average 60% of their income in income and consumption taxes while the wealthiest have a full range of tax shelters at their disposal to get around, if not cancel out, billions of dollars in income tax, we have every reason to call this a scandal of society.
It really is a scandal.
I invite everyone in Saint-Hyacinthe to my third annual tax credit information session, which this year will be at the Centre communautaire Rosalie-Papineau, 5250 Rue Gérard Côté in Saint-Hyacinthe.
Year after year, this event is a big hit and is attended by over 200 people, often close to 300. Last year, after attending this session, one of my constituents got back a $15,000 tax refund. I therefore invite all of my constituents to come out to this event so they can hear what tax credits they are entitled to.
In March 2017, the New Democrats moved a motion to eliminate tax havens, loopholes, and favourable treatment for the wealthiest Canadians, and it passed. Instead of taking action, the Liberals signed new agreements with other tax havens such as the Cook Islands, Antigua and Barbuda, and Grenada.
Now that we are approaching budget time, it is time for the Liberals to keep their promises. Almost one year later, we are realizing that the people in our ridings, the middle class, are the biggest losers when it comes to tax havens. The Liberals keep saying that they are working for the middle class and those who are working hard to join it. The reality is that the middle class is paying more income tax, while the wealthiest Canadians are laughing all the way to the bank thanks to loopholes and tax havens, compliments of the government.
All of this is increasing inequality in our society. Our leader, Jagmeet Singh, recently said that, even though the government keeps repeating that it is working hard for the middle class and those working hard to join it, the truth is that it is building an economy that works for the privileged and leaves everyone else behind. Because multinationals and the wealthiest individuals are finding ways of avoiding paying income tax, the middle class must shoulder most of the burden to compensate for the shortfall caused by the government.
Once again the wealthiest Canadians are getting richer more and more quickly to the detriment of the middle class, who must suffer the consequences. Instead of taking real action against this social scourge, the government is not doing anything about tax havens. That is the problem. Our tax system allows the wealthiest Canadians to legally send their money to tax havens.
It is urgent that we change the laws to remedy the situation. The government must present concrete strategies in the next budget to eliminate tax havens.
Mr. Speaker, it is indeed an honour to rise in support of the opposition day motion today, which asks the government to keep its promise to cap the stock options deduction loophole and to take aggressive action to combat tax havens and take concrete steps in the next budget to do so.
This is a very important motion for a number of reasons. During the course of my remarks, I want to talk about tax havens in particular. I also want to talk about the use of tax havens by companies that are in the burgeoning cannabis business, something that came up in the Senate a couple of days ago that I would link into this debate. Finally, I would like to talk about a private member's bill I have before Parliament that would make some contribution to this problem.
What is this problem? We have heard it often already. Other speakers have pointed the finger at the enormous and growing gap in our society, the growing inequality, where Canada's top CEOs earn 200 times the average person's salary. These statistics are quite extraordinary when Canadians hear them, and they cannot be said too often.
Oxfam reported last month that eight super-wealthy men own as much wealth as half the world's population. That is staggering. It is hard to get our heads around figures like that. Of course, the top 20% also own 67% of all the wealth in our country. This is not the kind of society I grew up in, but it is the kind of society we are leaving to our children and our grandchildren. I frequently hear, on the doorsteps in my riding of Victoria, the recognition that Canada is changing before our very eyes. One of the reasons it is changing is that we are allowing tax havens to flourish.
The government will tell us that it is doing all it can to deal with aggressive tax avoidance schemes, that it has hired all these people. However, as the old ad used to say, “Show me the money.”
I cannot remember how many times in the last Parliament I asked the member from Delta, who was a Conservative member and the minister of national revenue, just how much money they had recovered, because they kept bragging about how the CRA was on the front lines in doing all it could to recover this money. I kept asking how much money they had actually recovered. Here is how they put it: “We have identified billions of dollars.” I would ask the next time, “How much have you actually recovered?” I never got an answer. It was always “identified”. We need to watch the bouncing ball. We need to watch the rhetoric, because this government uses it as well.
About $500 million was recovered after the Panama papers were first exposed by countries that took seriously their need to tackle tax evasion and aggressive tax avoidance. The line between those two concepts is murky at best. How much did Canada recover? We do not know. They will not tell us. Maybe they identified a lot of money. I suspect that they did.
I do not for a second wish to make light of this. The government hiring more people is a good first step. Of course, when the Liberals were in opposition, they used to remind the House frequently that for every dollar invested in going after international aggressive tax avoidance, we would recover five or ten or some multiple. I absolutely believed them. It is an excellent investment.
Second, I support and applaud our government's work at the OECD, the G7, and other international places to make sure that we are part of the solution to tax avoidance and trying to deal with what they call BEPS, and a number of other things. I support Canada's leadership in those place. However, it is not as much as the British have or as the French have. I fear that Canada is there but perhaps does not have much to show for it yet.
Third, I noticed that Canada has entered into a number of these agreements called TIEAs, tax information exchange agreements. Sometimes it looks to a person reading them that all they do is regularize tax avoidance and that the use of tax havens seems to be just fine.
At the macro level, stepping back from this, our Income Tax Act has for a long time been criticized by accountants, the organized tax industry, and the person on the street who has enormous difficulty understanding how the scheme works. It is such a simple thing for a politician to stand up and say, “We have to simplify our tax system.” How long have we heard that? Sometimes we get simplistic arguments. Sometimes I hear in Alberta how we need to have a flat tax and all of a sudden everything will be better, no matter how regressive that in practice turns out to be.
We have a big problem at the international level and at the domestic level. If one talks about the effect of tax havens on Canada, it is nothing compared to what is happening in the developing world, where resources are siphoned off and find their way into bank accounts in Switzerland and Liechtenstein and places like that. The money that is so desperately needed for development is not happening. Sadly, some of that is in the mining sector, and sadly, the mining sector seems to be a significant part of Canada's economy. We see in Vancouver that half or more of mining corporations are incorporated, sometimes using tax havens.
I am trying to set out the enormity of the problem and some of the solutions that may be at hand.
One idea I think is worth discussing, at least, is my private member's bill, which is Bill . It would attempt to close some of these loopholes. This is a very simple two- or three-line bill, which I would urge hon. members to consider. It is inspired by the late Dr. Robert McMechan, who, sadly, passed away last year. He was a tax litigator for most of his career right here in Ottawa in the Department of Justice. He went on to do graduate work at Osgoode Hall. He wrote a very important book on international tax avoidance. He came into my office and asked to work with me in trying to get our hands around this enormous problem. Of course, I welcomed him with open arms.
The bill that is at issue would make what the Canadians for Tax Fairness have characterized as a significant impact. I confess that I do not know how they got this figure, but they claim that it would yield $400 million to Canada every year if this bill were implemented.
What would the bill do? Members will recall, back when Prime Minister Mulroney was in power and Michael Wilson was our finance minister, that Canada did what a number of countries did. The government incorporated into our Income Tax Act the general anti-avoidance rule, GAAR, as it is called. GAAR would be amended by my bill to require that there be “economic substance” considered as a relevant factor in determining whether transactions were “avoidance transactions”. If the judge had the ability to eyeball a set of transactions, he or she could say that they seemed to be only for tax purposes. Putting that money in Liechtenstein or the Cayman Islands has only one purpose, and that is to avoid paying taxes, and there is no economic substance, in the jargon, for that to occur.
That was how we started, but with great respect to our courts, they took a different path in the application of that principle, and “economic substance” seems to have been lost in the fog. Cases such as Canada Trustco and Copthorne took us to a place where courts were no longer able to do what they had initially been instructed to do. This simple amendment would put us on track with what the British and the Americans are doing: being able to ensure that there is a reason to put the money in the Cayman Islands, aside from simply saving tax. It is simple, but it is an ethically important thing to do.
Speaking of ethics, it is time we took tax avoidance much more seriously rather than saluting and applauding the wizards of Bay Street, be they in a law firm or an accounting firm, who know how to play the angles. The best and the brightest, when I taught law, often went there, because the ability to make money is astounding in this field. As Canadians, we should look at that the same way we look at smoking or other social vices. This should be seen as an immoral activity. Yes, it can be done, but no, it should not be. We should, as Canadians, be applying an ethical lens to this field of the use of tax havens and aggressive tax avoidance.
Mr. Speaker, it is always an honour and a pleasure to have the opportunity to rise in the House, and this is no exception. I will be splitting my time with the hon. member for , and I appreciate the opportunity to do so.
First, I completely share the commitment to fairness that is at the heart of today's motion for debate. I also believe our government has illustrated, in the clearest possible terms, through its actions, that it is committed to a fair system. Shortly after coming to office in 2015, the government took decisive, immediate action to begin the process of restoring fairness.
We raised taxes on the wealthiest 1% in order to cut taxes for the middle class, benefiting nine million Canadians. We did this, because over the past 30 years, the median real wage income of Canadians had barely risen, leaving many concerned about their future. At the same time, the after-tax incomes of the wealthiest .01% of Canadians had risen dramatically. Individuals earning more than $1.8 million per year had seen, on average, their income rise by nearly 156%, or 3.1% per year on average, after inflation..
Canadians want a country where hard work is rewarded with greater opportunities and a real chance at success. We have been taking action to make this a reality.
I do not disagree. In fact, I would submit that no member in the House disagrees with the sentiment that every Canadian deserves a fair chance at success, with the sentiment that there should be a level playing field, that Canadians from coast to coast to coast should have the same opportunities, regardless of their lot in life, regardless of what their parents did before them, regardless of where in the country they live, and regardless of where they came from.
The sense of inclusion is so important to the essence of what it means to be Canadian. I think we all share this fair and level playing field commitment. No young Canadian should feel that they do not have the same chances, that they do not have the same opportunities as their neighbours.
This is how Canadians thrive, how Canadians see themselves, proud of our country, proud of its people, and proud of the opportunities we offer to everybody. The sense of inclusion is not a sense monopolizing Canada or only in Canadians, but it is the sense of how do we get there, how do we get there fairly, and how do we include everyone in our society.
This notion of inclusion has been around as a human notion perhaps from time immemorial. In the 1960s and 1970s, that notion of inclusion had more to do with ensuring everyone had equality and everyone had the same rights. As our economy is modernizing and as the global economy is changing, this notion of inclusion has become an economic notion.
GDP growth, of course, is laudable. GDP growth is something every nation wants. However, if that growth does not include everybody, if that growth is not distributed fairly, if that growth leaves large parts of the population behind, then we have let society down. We cannot have a society where a smaller and smaller percentage of the population gets more and more of the benefits of the economy. That is not fair, that is not right, and that is unjust.
That is the essence that underlies this motion, and it is a laudable motion.
As a federal government, we need to ensure we create a fair system. This is all about fairness of opportunity, and of course the tax system. The tax system is one tool that our federal government has at its disposal. There are others, but today we are focusing on that system. Building a tax system that supports fairness and opportunity has been fundamental to everything this government has done.
In our 2016 budget, this government replaced the previous child benefit system with the Canada child benefit. That CCB is simpler, more generous, and better targeted to those who need it the most.
During the first year, over 3.3 million families received more than $23 billion in CCB payments. Nine out of 10 families are better off under the CCB than they were under the previous system. In my riding of Newmarket—Aurora alone, over 13,000 families are receiving nearly $5,500 for a combined investment, because that is what it is, in our families and our people of $70 million.
This is one tool that helps create fairness. It is lifting children out of poverty. It is allowing families to let their children participate in extracurricular activities that perhaps they could not afford. It is helping offset the high costs of day care in my part of the world.
This is what a federal government should do. This is how the tax system can work fairly. I am proud to be part of a government that implemented this fundamental change.
In October, we also announced a reduction in the small business tax rate to 10% effective January 1 of this year, and to 9% next year. For the average small business, this will leave an additional $1,600 a year for it to reinvest in its business. Small businesses in many ridings, including my own, are the engine of growth. Any extra tax room they have is reinvested in their business, which of course helps grow the business, which then creates the middle-class jobs.
Those are two examples of the ways the tax system is being used to benefit Canadians and to help ensure that level playing field, that equal chance at opportunity that every Canadian deserves.
This is an economic reality. The global market is changing. The world economy is changing. There will be a premium on innovation. There will be a premium on skilled labour. We need to create a society that puts a premium and important value on innovation and skilled labour. This is how our economy will grow. We cannot be lackadaisical in these efforts. We must always remain vigilant that the growth Canada has been blessed with is shared equally by all.
This economic reality can quickly become a social issue if growth is not inclusive. If chunks of the population feel left behind, if they feel there is no chance or opportunity for them, if they feel the economy does not work for them, they will conclude that society does not work for them. We cannot leave chunks of our population behind. As the economy changes, we have to ensure we lever the opportunity as a nation. However, we have to ensure the rewards of those opportunities are shared by all. I do not think any member in the House would disagree with that sentiment.
It is clear that our government is delivering a fair tax system. I can assure hon. members that our work will continue. Going forward, we must remain vigilant and address inconsistencies and unfairness in the tax system. This is so important because fairness is at the heart of our government's plan for long-term sustainable economic growth.
Mr. Speaker, I am pleased to be here in the House waiting for my turn to speak.
I thank my friend, the hon. member for for giving me the opportunity to talk about what our government is doing to ensure that our tax system is fair to all Canadians. We were elected on a promise to strengthen the economy and support the middle class and those working hard to join it. An important part of that promise is to ensure that our tax system is fair.
Therefore, on the one hand, the government has made intelligent investments to grow the economy and, on the other hand, it is ensuring that all Canadians benefit from these investments. I did say all Canadians and not just the wealthy. To that end we cut taxes for nearly 9 million middle-class Canadians and we created the Canada child benefit, which gives more money than before to nine out of 10 families with children. This money can be used to purchase school supplies or sports equipment, for example.
That is also why we are cutting the small business tax rate. As of January 1, it is 10%. On January 1, 2019, in less than 11 months, it will be lowered to 9%. The combined tax rate for small business will continue to be the lowest by far of all G7 countries.
We have helped small business create jobs. When entrepreneurs grow their business, they find new markets and create well-paid jobs, and that benefits Canada. However, when the system is used by fortunate individuals who incorporate to take advantage of unfair tax breaks, that is detrimental to Canada. We must take action and standardize the rules. That is why, in budget 2017, we announced that we would be looking into this issue.
Last summer, we held consultations and we met with Canadians across the country. My colleague, the , will have more to say about that in budget 2018, but I can reassure my colleague opposite that tax fairness for the middle class remains one of our government's top priorities.
Over the past few months, we have heard from business owners, professionals, and experts on how to improve our proposals. We listened to what Canadians had to say and are acting on their suggestions. As a result, the government announced that it will no longer implement some of its initial proposals because they would prevent people from transferring their businesses or family farms to the next generation.
We have also clarified the rules on income sprinkling, which allows high-income business owners to greatly lower their personal income taxes by shifting income to family members with little or no income. We want to better regulate this practice. However, we are going to make sure that we do not penalize family members of business owners who make a meaningful contribution to the business. There are now very clear criteria in place. Adults who are 18 and who work in the business at least 20 hours a week on average will not be affected by the changes. Adults aged 24 and over who own at least 10% of a service-based business will also not be affected.
The same goes for the spouse of a business owner, as long as the owner has made a significant contribution to the business and is 65 years of age or older.
Last fall, the government also reaffirmed its commitment to take steps to limit tax deferral opportunities related to passive investments. We already said that a detailed proposal would be included in the 2018 budget.
The government remains determined to improve the integrity of the Canadian tax system. By taking action to prevent tax evasion and close tax loopholes, we are contributing to fiscal sustainability.
The government’s priorities consist of looking out for the well-being of Canadians, growing the economy, creating jobs, strengthening the middle class, and helping the women and men working hard to join it. To do that, maintaining the integrity of the tax system is vitally important. Everyone needs to do their part, and ensuring that remains a goal of our government. I am convinced that the hon. member will agree that this is vital and essential.
In closing, I firmly believe that my colleague across the way will support this government’s efforts.
Mr. Speaker, I will be splitting my time with the fantastic member for , our new agriculture critic, who brings his perspective from Vancouver Island, which is well needed in this House.
I am very pleased to speak to the NDP motion which asks that the government keep its promise to cap the stock option deduction loophole and take aggressive action to combat tax havens, and that the House call on the government to respect that resolution by ensuring that both measures are included in budget 2018.
There is no questioning the fact that all over the world, aside from climate change, poverty is the biggest problem humanity faces today. For over 50 years, New Democrats have consistently warned of the growing inequality in Canada between the haves and the have nots, between the 99% and the 1%.
Sixty-five years ago, people and corporations contributed equal amounts of income tax to the Canadian government. In 2015-16, Canadians paid $145 billion in income tax, while corporations paid $41 billion. We have gone way off track on tax fairness inside our country, and we are not seeing investment. We are not seeing our country grow from the model we currently find ourselves in.
By 11 a.m. on January 2, Canada's top-paid CEOs had already earned what the average Canadian earns in a year. In other words, the top Canadian CEOs earn more in a day and a half than millions of hard-working Canadians will take home in a full year. Canada's top CEOs earn 200 times the average person's salary. It is understood there will be more money being made by those sitting in CEO roles, but this has become extreme. When on the other end there is extreme poverty, we, as a country, have to take measures to address this. The Liberal government needs to take this issue seriously.
There are two Canadian billionaires who possess the same amount of wealth as 11 million Canadians. Eleven million Canadians are struggling. Greater numbers than that are struggling and for two people to be able to live their lives in extreme comfort is unacceptable.
The governing parties in Canada have often tried to portray themselves as fighting for the vulnerable in our society, but they continually pass legislation, create budgets, sign trade deals, or make backroom deals that ensure those who hold the power and wealth in our country, who have always held the power and wealth in our country, keep it and grow.
What have the Liberals been up to instead? They have gone after farmers and small business owners. They have failed to stop Revenue Canada's move to tax employee discounts, something on which we are still getting calls in our constituency offices on a weekly basis. These are people who earn minimum wage or people who receive this benefit as part of their wage package. We have signed trade deals with investor-state dispute settlement provisions that ensure power and profits stay in the hands of the wealthy elite and actually bypass the court system in Canada.
The , instead of eliminating precarious work, said to Canadians and our youth that they will just have to get used to it, to just accept it, that this is the way it is going to be. That is unacceptable to me and my colleagues in the New Democratic Party. What does it say to taxpayers, constituents, people in our communities when CEOs avoid paying their fair share while ordinary citizens have to play by the rules? It sends a message that the rules of this game are rigged completely against them.
I find it laughable that the Liberal government's two major champions of the middle class have no idea what that actually means. The and the certainly have no idea what it means to struggle to pay the bills. They are extremely disconnected from the lives of Canadians. Saying that our country is improving and doing so well does not actually trickle down to Canadians in their everyday lives. That is not the lived experience of Canadians today in our country, regardless of what those numbers say.
New Democrats have always fought for and defended low-income families. As a matter of fact, there are many families in our communities right now who have no wage, who are relying on social safety nets because they are simply unable to find work. There are seniors who are now having to look for and go back to work because they cannot afford to live on what the government is providing them today. As New Democrats we know this inequality is completely unacceptable and we fight against that entitlement.
I want to talk a bit about my riding of Essex in southwestern Ontario and what poverty looks like for the people I know in the five municipalities I represent. My constituents are some of the hardest hit when it comes to poverty. According to Statistics Canada, in 2016, Windsor-Essex had the highest percentage of children growing up in low-income families in Canada, at 24%. This means that one in four children under the age of 17 in Essex is living in poverty. Their parents cannot afford to keep the lights on or pay the grocery bills. They are calling or coming to my office every single day. They are in tears, distraught, because they are struggling so badly under the way our current system is working.
The United Way of Windsor-Essex and the University of Windsor's Great Lakes Institute for Environmental Research mapped this data. It shows increasing poverty concentrations in my communities, such as Lakeshore, Harrow, and downtown Essex. These are rural communities. These are very small communities. There is an increasing number of seniors in our communities. My constituency office cannot keep up with the need, nor can my provincial counterpart.
Incomes are shrinking. Investors and small businesses are leaving, and services are no longer available. I will not even begin to describe the transportation challenges that exist in rural communities, because they are very significant and quite a barrier to people being able to access their daily needs.
Fifteen to 20 years ago, Windsor had some of the highest per capita income levels, due to the strength of our manufacturing sector. The provision of these good-paying, unionized jobs really sustained our communities. The research that was done shows that 25% to 40% of young people will not be able to pull themselves out of this destructive cycle of growing up in poverty. The one in four children already growing up in poverty will likely not be able to get themselves out of that cycle. I promise that it is not for a lack of trying or wanting something better. It is simply that there are so many barriers in front of them for them to achieve success.
I am proud of the United Way of Windsor-Essex. It has been running a pilot program to help youth who are impoverished to ensure they can make it through high school, because they are dropping out at a large rate in order to support their families. This is incredibly important.
My colleague from spoke earlier about the concept of identified money versus money actually captured. I think of the money we could capture, money that could go back into ensuring that in my riding of Essex we no longer have children living in poverty.
I implore the Liberals to think back on the motion they supported, where we would end this practice, and to look forward to budget 2018, where we can improve the lives of Canadians with the money we could potentially have.
My colleagues have spoken eloquently about the need for a pharmacare program in our country. It could be funded by the money we could repatriate. If we could get this money, Canadians would no longer have to struggle or decide between buying their medication or paying their hydro bills.
I mentioned seniors. The budget could increase the GIS. The GIS boost that seniors received of $1,000 a year for our most impoverished seniors has not dramatically changed their lives. We need to go further for seniors in our country. Seniors are feeling left out by the Liberal government. There certainly have been moves toward families, but our seniors have been left behind. Although we saw the movement toward improving CPP for my teenage children, which I am appreciative of, we need to improve CPP today for our seniors who are living in poverty.
There are many things we could be doing with this money. New Democrats are big thinkers. We are happy to provide the government with ideas on ways that we think Canadians' lives could benefit by getting this money, but we need the government to act, not just talk about what it is going to do.
We need it to act on this immediately. We heard the talk about her efforts. Her efforts are not returning results, and we have to question that when we look at the moves other countries have made.
New Democrats will continue to fight for tax fairness in our country.
Mr. Speaker, it is always tough to follow the member for . She is a very passionate defender of her people, and it is an honour to serve with her in the House.
I congratulate my colleague from , our new finance critic, for bringing forth this debate. It seems that, once again, we on this side of the House are calling on the government to honour a promise. I am starting to lose count of how many times we have had to do this.
The motion that was adopted by the House happened almost an entire year ago. It is because we have seen failure by the Liberals to act on these proposals that we have to again bring forward this motion. We are very glad to be doing so, but we want Canadians to know that, on this side of the House, we are doing our job to hold the government to account.
We will make sure that Canadians know we are fighting for tax fairness on this side of the House. I hope to see budget 2018 reflect some of the promises and hopes that Canadians have in seeing the power that we wield in the House actually used for some good, because we do collectively wield a lot of power in the House of Commons, and we can have that ability to make a real difference in Canadians' lives.
Our motion last year and again today is asking the government to address tax loopholes that primarily benefit the wealthy, including keeping the Liberal campaign promise of closing the stock option deduction loophole. The second part is that we want the Liberal government to crack down on the use of tax havens. We want to see the tightening of the rules for shell companies, renegotiating tax treaties that let companies repatriate profits from tax havens to Canada tax free, as well as ending penalty-free amnesty for deals with individuals who are suspected of tax evasion.
I got into politics because of the availability given to me in the previous seven years, before 2015, where I worked as a constituency assistant. I was primarily responsible for case work. In that seven years, I really got to see up close and personal the financial details in meeting with my constituents. I really got to see that there were a lot of families out there who were playing by the rules, working extremely hard, but the system was kind of gamed against them because of low incomes.
The tax system really exists in two worlds, and they just needed a little more help. However, I saw that the policies and legislation enacted in Ottawa were increasingly not looking after those who needed it the most. Therefore, when the opportunity came for me, I decided to enter politics, because I was not quite ready to say goodbye. I felt compelled to come to this place to continue on the fight for what so many of my constituents and so many Canadians deserve. We really do have an opportunity before us to do the right thing.
In Canada, we are increasingly seeing two worlds, and the world for most Canadians is increasingly unaffordable. It involves more precarious work, and it is a harder place in which to get by. The second world is an exclusive club for the wealthy and the well-connected who get that special access, and are exempt from rules the rest of Canadians play by.
We live in a Canada where by 11 a.m., on January 2, Canada's top-paid CEOs had already earned what the average Canadian earns in a year. They earned approximately 200 times the average person's salary. The top 20% of Canadians in 2015 owned 67% of all the net worth in Canada. Therefore, we live in a Canada where wealth is becoming increasingly concentrated in the hands of a few.
I salute people who are successful and able to generate wealth for themselves, because we have to salute those people. However, it is increasingly a sign of instability for our society when we have the top 1% accumulating massive amounts of wealth, and the rest of us are not seeing any noticeable increase in our standard of living. This is an unstable situation, and if we allow it to continue, we cannot survive as a country. Something must be done to address this.
Successive Liberal and Conservative governments have given up billions of dollars in tax revenue over the past three decades due to the loopholes that exist, by invoking trickle-down theories to defend a loophole that benefits mostly the ultra-rich. We all know about trickle-down economics, how wealth will magically trickle down to the people who need it. If we just allow the people at the top to earn all the money they can, they will in turn allow that money to trickle down. There is no evidence out there to show that this has actually worked. That is not sound economics.
Increasingly, we are seeing that wealth continues to accumulate at the top. Some people continue to defend trickle-down theories, which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in this world, but that is an opinion that has never been confirmed by the facts. Indeed, even the International Monetary Fund recognizes that trickle-down economic theories are absolute bunk.
Tax avoidance and evasion by the rich undermine our democracy by starving the social programs and public services that many of us depend upon. When we are not collecting that money, we are actually losing the availability of that revenue to fund social programs that we could very much use. It significantly undermines the government's ability to provide funding for urgent priorities, such as affordable housing, public transit, health care, green infrastructure, education, and other public services.
It is estimated that the use of offshore tax havens, which is at its highest in history, is costing Canadians $10 billion every year. Canadian corporations stashed almost $40 billion in 2015 in the top 10 tax haven destinations for Canadian capital, which brings the total since 1990 to $270 billion. These are places like the Cayman Islands, Barbados, and other jurisdictions. In fact, the top five tax havens are Barbados, Luxembourg, the Cayman Islands, the Bahamas, and Bermuda.
Liberals did vote in favour of the motion last year, but since then they not only have failed to act upon it but have also gone on to sign other tax haven treaties with the Cook Islands, Antigua, Barbuda, and Grenada. With the budget fast approaching in 2018, we really need the government to live up to its promise and address these loopholes.
The flip-flop on the stock option loophole and on tax havens shows the influence that powerful insider lobbyists have on the government's policies. My constituents do not have access to high-priced Bay Street lobbyists. They do not have that inside track with the Liberal cabinet. I just wish that the voices of ordinary Canadians would actually make it into tax policy. This is an area where the government can clearly make a difference, and the Liberals will find support from the New Democrats on this issue. We will gladly support them. In fact, I encourage the to consider putting these measures in budget 2018.
It is going to take a strong political will to reverse the trend of rising income inequality, which began decades ago and has continued under both Conservative and Liberal governments. There are a number of things we could do. We need to change the corporate tax rules that allow for the use of shell companies. We need to review the tax treaties that let companies declare profits in tax haven countries and then repatriate them back to Canada absolutely tax-free. We absolutely need to end penalty-free amnesty deals for individuals.
We have to show that people engaging in this kind of practice are going to have the book thrown at them. Absolutely no ands, ifs, or buts, we have to stand by our word. When a parent starts bending the rules, kids always look for a way to continue going after it. It is the same with people who avoid paying tax. If they realize that the government is willing to negotiate, they will simply use that to continue the same kind of behaviour.
In conclusion, there are so many areas where we could do some good with this money. We could have a national pharmacare plan or a national child care plan, or end boil water advisories for first nations reserves. I really hope that these measures make it into the budget. The government has willing partners on this side of the House to actually see these measures adopted. Let us use our collective power as members of Parliament to finally get these measures passed, do a good job for Canadians, and make this a fairer country. Ultimately, every single Canadian who voted in the last election would like us to live up to that ideal.